The maneuver takes place as Fed Chairman Ben Bernanke battles the worst financial crisis since the Great Depression of the 1930s.

In the last few days, the American financial system has been badly shaken as bad bets on dodgy mortgage-backed securities claimed more Wall Street giants.

The cash infusion was designed to help ease a spike in the overnight lending rate between banks. A sharp rise in such borrowing costs makes banks reluctant to lend to each other, worsening already tight credit conditions.

Hours earlier the Fed in coordinated action with other central banks, stepped up action to ease the intensifying crisis that erupted just over a year ago.

They banded together to flood global markets with dollars. All told, the Fed increased lines of cash to central banks by $180 billion to $247 billion.

The measures are "designed to improve liquidity conditions in global financial markets," the Fed said in a statement.

"The central banks continue to work together closely and will take appropriate steps to address the ongoing pressures."

Working with the Fed in the coordinated action were the European central bank, the Swiss National Bank, the Bank of Japan, the Bank of England and the Bank of Canada.

The action comes during an especially tumultuous week. The stock market has nosedived and investors have fled to super-safe investments like Treasury securities and gold.

Briefly on Wednesday investors were willing to pay more for certain Treasury securities than they expected to get back when the investments matured, a rare event.

At the start of the week Lehman Brothers, the fourth-largest US investment bank, filed for bankruptcy protection.

A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. Insurance giant American International Group was given an $85 billion emergency loan from the Fed in a deal allowing the government to take control of the company.

So far this year, 11 federally insured banks and thrifts have failed, compared with three last year. The largest US thrift, Washington Mutual Inc., is faltering.